Why It Is Right time to Invest in Petronet LNG
Here are few of the reasons that could be figured out after fundamental analysis of the stock
- The present equity of the company is Rs.750 crores which is held by promoters being 50% FIIs and OCBs 20% and 30% is held by the public.
- Dahej Terminal is operating at optimum capacity and meeting nearly 25% of the country’s total gas supplies. During FY 08, at Dahej 101 LNG cargoes were unloaded and 321.95 mmBtu of regasified LNG was supplied to the offtakers.
- During FY 08, the total revenue of the company was at Rs.6,609 crores on which, cost of LNG was Rs.5,566 crores leaving a gross margin of Rs.1,043 crores. PBT was placed at Rs.715 crores while PAT was at Rs.475 crores, resulting in an EPS of Rs.6.33 against Rs.4.18 of FY 07.
- With capacity of Dahej Terminal increasing in phases from July 08 which would be fully expanded by December 08, with 100% increase, the second half of FY 09 would see improved working. However, third tranche of gas under long-term supply from Rasgas would commence from mid 2009 with third tranche of 2.5 million metric tonne, and for this interim period of one year, the company will have to source LNG from other short term source, for which the company is hopeful of.
- The company is also setting up in JV with Adanis, a solid cargo port at Dahej to import/export bulk products like coal, steel and fertilizers and first phase would be completed by Nov. 09 while second phase by September 10.
- As at 31-03-08 the total debt of the company was at Rs.1,578 crores against its networth of Rs.1,619 crores. However, this borrowing is backed by capital work in progress of Rs.1,061 crores, Cash and bank balances of Rs.359 crores and investments in mutual funds of Rs.526 crores. So, the company can be termed as debt free, as net debt of Rs.693 crores is mainly used for new capacity creation.
- The board of the company declared a dividend of 15% for FY 08. Share is now ruling at Rs.55 had a 52 week high low of Rs.122 and Rs.48. The low of Rs.48 was made recently on 2nd July 08 from where it sharply recovered.
- For FY 09, though the capacity expansion is likely to get completed in phases, still a growth of 25% can be expected in topline and bottomline for FY 09 which should result in an EPS of close to Rs.8.
- The company also has plans to set up 1,200 MW gas based power project at Dahej with capex of Rs.3,600 crores. All these projects of solid cargo, power plant, second terminal at Kochi would give it strong asset based projects which would yield results after 3 – 4 years. Due to low gearing of the balance sheet of the company, raising this kind of money would not pose any difficulty to the company.
Share at Rs.55 is an ideal buy which can give 25% annualized return over the next 2 – 3 years with virtually no downward risk.
*To get the password for buy calls, please subscribe to this blog. You will receive the password in next email to you*If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment